The board of Newport Beach-based chipmaker Conexant Systems Inc. has sided with a higher buyout offer from a private equity firm and appealed to original suitor Standard Microsystems Corp. to up its bid.
Conexant said Tuesday its directors deemed a $282 million offer to buy the company from San Francisco’s Golden Gate Private Equity Inc. a “superior proposal.”
The move gives Hauppauge, N.Y.-based chipmaker Standard Microsystems until the end of the week to match the offer or persuade the board that Conexant is better off taking Standard’s January offer of $270 million.
Standard could up the ante for Conexant, according to Blayne Curtis, an analyst at Jefferies & Co.
“We believe there is a high likelihood that Standard Micro will revise its offer given the strategic fit between the two companies,” he said.
But Curtis said he’s doesn’t expect “a full out bidding war” for Conexant.
Earlier this month, Standard seemed hesitant to up its offer for Conexant.
“We believe that (Standard) and Conexant together have the opportunity to take advantage of economies of scale and drive profitable growth, and that our proposal would provide Conexant stockholders with the opportunity to participate in the future success of the combined company,” Chief Executive Christine King said in a statement.
Standard Microsystems has some $160 million in cash on hand, which doesn’t provide a great deal of wiggle room to boost the cash portion of its offer, which totaled $92 million.
The company makes chips for disk drives, keyboards, Universal Serial Bus ports, networking devices, portable electronics and other products with industrial uses. Standard has yearly sales of about $400 million.
Conexant makes chips for multifunction office printers, digital picture frames, PC speakers and other devices and has annual revenue of $200 million.
The buyout offers from Golden Gate and Standard include debt held by Conexant, which had a recent market value of $210 million.
Golden Gate’s offer comes with a twist: a former chief executive at the chipmaker who was ousted a few years back.
Dan Artusi, who led Conexant for about nine months until early 2008, is an operating executive at Golden Gate.
Industry watchers believe Artusi spearheaded Golden Gate’s offer based on his knowledge of Conexant.
At Golden Gate, Artusi is “focused on semiconductor and communications investment opportunities,” according to the company’s website.
Interest in Conexant comes after a turnaround that started with the arrival of Chief Executive Scott Mercer, a longtime board member who was brought in after Artusi left abruptly in spring 2008.
Dwight Decker—Conexant’s former chief executive who led the company for nearly all of its life since spinning off from aerospace contractor Rockwell International Corp. in 1999—recruited Artusi.
Artusi came to Conexant after two years as chief executive of Austin, Texas-based ColdWatt Inc., a maker of electronics that convert power from wall outlets for use in computers.
Before that, Artusi spent four years at Austin chip designer Silicon Laboratories Inc., including a year as chief executive.
He joined Silicon Laboratories in 2001 from what now is Freescale Semiconductor Inc., a Motorola Inc. spinoff in Austin.
For most of Artusi’s career, he was with Motorola Inc.’s chip division, serving as vice president and general manager of various units.
An Argentina native, Artusi currently serves on the board of Santa Clara’s Atheros Communications Inc., which is being acquired by San Diego-based Qualcomm Inc.
Artusi left Conexant in what some said was a clash with Decker and other directors over the pace of restructuring.
Decker left Conexant’s board last year.
Mercer largely picked up where Artusi left off in terms of reworking Conexant.
In the past two years, Conexant has reworked debt, sold stock and debt, sold a chunk of land near its headquarters and done a handful of patent sales.
Mercer’s also nixed underperforming products, shed units that weren’t profitable or growing and made small buys to get into markets set to grow.
Mercer was set to step down from his post pending the closure of the deal with Standard.
He was set to be replaced by Sailesh Chittipeddi, who was slated to run Conexant as a unit of Standard and head up the parent company’s global engineering and product lines as an executive vice president.
It’s unclear what Conexant’s leadership would look like under Golden Gate, or if the firm would put Artusi back in charge.
